There aren’t many tenants moving to Downtown Manhattan. On Broadway, the only transaction signed since Sept. 11 is a 6,500 sq. ft. Ann Taylor store, according to Gary Trock, director of retail at New York-based Insignia/ESG. And to make this transaction happen, the building owners were forced to give some concessions.
Since about mid-December, Trock says that national and local tenants are only slowly starting to check out the Downtown market again. But at least more tenants are browsing, says Trock, who represents the 40,000 sq. ft. 100 Broadway. "We’ve had a multitude of national as well as local tenants who have walked through the space."
Right now, Trock is entertaining offers. He admits that in the post-Sept. 11 market, concessions will be necessary to get tenants to commit to a market that was decimated by the World Trade Center attacks.
And tourists are replacing some of the lost traffic as they come to see Ground Zero. But even with this new traffic, the loss of their pre-Sept. 11 client base still concerns retailers, according to a Downtown Alliance Survey of Lower Manhattan retail establishments. "Decreases in the client base were most frequently attributed to the loss of corporate clients and declines in weekday foot traffic," the report states.
Retail in Lower Manhattan
The January 2002 survey canvassed 881 retail businesses in Lower Manhattan and revealed that 62% of area retailers reported a "severe decrease" in sales volume and 33% reported a "modest decrease." Half of the respondents indicated that sales volume during fourth-quarter 2001 was 20% to 50% lower than their volume during fourth-quarter 2000. "The businesses didn’t exhibit much optimism for the first quarter of 2002," the report says.
Retailers also are dealing with insurance claims, more than four months after the attacks. "Many retailers face processing delays and the possibility of partial payments," according to the report. "An average of only 5% of retailers have received full payment for claims filed against their carriers. Fourteen percent of retailers have received partial payments, and the claims of 60% of retailers who filed for coverage are still being processed."
Ensuring the future of downtown retail requires making the area more attractive as a place to do business, according to survey respondents. Seventy-eight percent of retailers across the District and Tribeca indicated that an increase in client base was critical. Twenty-seven percent said that tax breaks or real estate incentives would make the area more attractive, and 21% said that improved transportation access would make it a better place to do business.
To Trock, the real indicator of how Downtown retail’s recovery will come when the weather improves during April and May. "When the weather’s nice, we’ll be better able to decide whether things will get better or worse," he says.